New report says state transportation system needs $1b annually in new revenues; discusses array of possible tax increases

A new report from the board of the Massachusetts Transportation Department says the state transportation system needs $1 billion-plus in new annual revenue and outlines a wide range of possible new taxes and fees to raise the money, including possible increases in the gas tax, sales tax, and income tax.

“We cannot adequately pay for the transportation system we have today, and the improved statewide system that our customers want is one we definitely cannot afford without additional funding,” the board said in releasing the report, “The Way Forward: A 21st-Century Transportation Plan.”

To fully fund operations and implement its plan, the document said, the state will need to raise an average of $1.02 billion per year in new revenue in the next 10 years.

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The plan discusses a number of “options and recommendations for raising new revenues that have been proposed by the public and municipal leaders,” saying the Transportation Department and the Legislature should “consider these and other revenue options.”

The options included: a new 0.16 percent transportation payroll tax that employers would pay on their employees’ wages; a 30-cent increase per gallon in the existing gas tax; an increase in the state sales tax from 6.25 percent to 7.75 percent; and an increase in the state income tax from 5.25 percent to approximately 5.66 percent.

Other possible revenue sources include a “green fee” that would be added to existing title and registration fees, and a vehicle-miles-traveled tax of 2.4 cents per mile that would collected at the annual safety inspection or by an onboard device.

Revenues could also be raised by “a series of modest, regular increases to transportation fares, fees and tolls,” the report said. Other possiblities to raise money include installing tolls on major highways, tolls on car pool lanes, or developing congestion pricing, which would raise tolls during peak traffic periods.

The report also said it assumed that the tolls on the western section of the Massachusetts Turnpike would be kept in place, which would require legislative approval, since under current law they are expected to be taken down after the bonds on that section of the turnpike mature in 2017.

If no action is taken, the board said, it would have to take a number steps to address budget deficits in 2014, including increasing registration fees by $53, increasing annual vehicle inspection fees by $19, increasing license fees by $85, increasing Massachusetts Turnpike tolls by 5 percent, increasing MBTA fares by 5 percent, and cutting $40 million in service from the MBTA.

“These additional revenues and service cuts, however, are unsustainable and will result in a short time a failed system,” the report said.

The report said that the “imperative to better fund” the transportation system had been exhaustively documented by various groups over the past several years.

And it warned that, if more funding isn’t found, there will be “inconveniences, lost opportunities for economic development and job growth, lost opportunities for improvements to our natural environment, and, at worst, jeopardized public safety.”

In addition to revenue increases, the report also said the department “must and will continue to improve its business practices and take advantage of new technology” to deliver more “efficient, cost-effective service.”

Reforms could include: all-electronic tolling replacing toll plazas with overhead gantries ; video tolling, in which bills are sent to people based on a camera image of their license plate; streamlining the Registry; and sale of surplus real estate.